The Niger Delta Avengers are back — and they’ve got big oil in their crosshairs

The Niger Delta Avengers resumed their campaign of sabotage on Tuesday, potentially kicking off a return to the serial bombings the militant group carried out earlier this year.

Those attacks sent Nigerian crude output to a more than decade-low and deepened an economic crisis in the Western African nation brought on by persistently low oil prices. Analysts say the government has been slow to advance a coherent response, and in the absence of an effective strategy, the conflict will likely escalate, putting Nigeria’s recovery in question and global oil supply at risk.

The Avengers on Tuesday claimed responsibility for an attack on a pipeline that feeds the Escravos offshore terminal operated by Chevron‘s Nigerian subsidiary. Last spring, Chevron briefly closed the facility for the first time in its nearly 50-year history due to fighting in the area.

Chevron did not return a request for comment.

The strike showed the Avengers are willing to make good on their threats to launch a second wave of attacks on oil majors that defy its order to let sabotaged infrastructure lie until the government meets its demands.

“This action is to further warn all [international oil companies] that when we warn that there should be no repairs pending negotiation/dialogue with the people of the Niger Delta, it means there should be no repairs,” the Avengers said in a statement on Tuesday.

The Avengers had already fired a warning shot in September, when they claimed an attack on an export line operated by a Royal Dutch Shell subsidiary carrying Bonny Light crude. That marked a “major blow” to Nigeria’s efforts to restore crude exports as a ceasefire took hold, according to Teneo Intelligence.

“While the exact impact on production of the latest bombings is still unclear, the attack nevertheless reaffirms our earlier expectation that a sustained increase in domestic crude production is unlikely for the foreseeable future,” wrote Manji Cheto, senior vice president at Teneo.

Overtures but no results

Attempts to hold talks with the government appear to have stalled, and analysts say President Muhammadu Buhari now seems categorically opposed to expanding the 2009 amnesty program that brought an end to a years-long Delta uprising by offering militants stipends and job training.

Just one day before the attack, the Eurasia Group’s Ayso Van Eysinga told CNBC the failure to advance a solution had increased the risk of a strike on critical infrastructure such as Shell’s Forcados terminal, which resumed exports this week following an eight-month outage due to an attack on an underwater pipeline claimed by the Avengers.

Both sides have made overtures, but they have done little except secure a brief pause in the conflict, which oil firms have exploited to restore some production.

On the one hand, communication is difficult because the Avengers leadership remains shrouded in mystery and a host of local leaders have sought to act as spokesmen, complicating efforts at making direct contact, said Van Eysinga, an associate in the Eurasia Group’s Africa division.

“The government has come to the table, but often with the wrong people,” he said.

On the other hand, no one government official appears to be spearheading outreach, perhaps signaling the state lacks either the chain of command or the will to tackle the problem,Van Eysinga said.

“It doesn’t seem like they have a coordinated effort to try to figure out who they should speak to,” he said. “It’s many different people trying to get to the same end but without a concerted strategy.”

No end in sight

The attacks could continue for six months to a year because a quick fix does not align with Buhari’s broader campaign to fight corruption, in Van Eysinga’s estimation. He believes Buhari is more disposed to advancing a peace-plan based on development initiatives for the Delta. That, however, would take considerable time to implement.

The Avengers are calling on the government to reform the method it uses to disperse oil revenue so the crude-producing Delta gets a larger share. Other economic activities like fishing and agriculture have been made untenable in parts of the Delta by widespread pollution caused by crude production, theft from pipelines that causes oil spills and illegal refining.

The government appears to be pushing ahead with efforts at economic diversification in a bid to ease the Delta’s “stranglehold” on the economy, according to Teneo’s Cheto.

Buhari has asked Nigeria’s parliament to approve $30 billion in foreign borrowing to stimulate Nigeria’s economy, which has fallen into recession for the first time in two decades. Crude oil accounts for about 80 percent of Nigeria’s overall exports, according to Nigeria’s National Bureau of Statistics.

But the only near-term solution able to buy Buhari time is another amnesty-style program, Cheto said. That prospect has fueled the growth of militant groups in the vein of the Niger Delta Avengers, she said.

“This is clearly an attempt on these groups’ part to assert themselves as important stakeholders in any talks, ostensibly in the hopes that they too would benefit from any eventual government pay-outs,” Cheto wrote.

John Campbell, former U.S. ambassador to Nigeria, said he strongly suspects but cannot prove members of these groups are not bound by a core mission, but are jumping from one organization to another based on who will best compensate them for carrying out raids on oil infrastructure. He also cautioned that the attacks are likely underreported because it’s not in the government or international oil companies’ interest to disclose them.

The highly decentralized type of insurgency blossoming today has been present in Nigeria since colonial times, and it is probably not going away any time soon, he said.

“You can buy off fragmented groups. You just pay everyone. But to address the fundamental issues, the sense of alienation, the sense of unfairness, the consequence of years of poor governance, all that takes time. It takes political will and resources,” Campbell said.

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Comments

Bonus Group: It is understandable that a niche now exists in the market for a company similar to BG Group, but for Neptune Energy to set its aim at emulating and becoming like BG is nothing short of horrifying. Why anyone should wish to recreate the inept management, twisted HR policies and rancid technical half truths of BG Group in order to deceive the shareholders is beyond comprehension. If they do, then the Serious Fraud Office should be on the alert. Sammy 'two pools', whose past remit included selling Enterprise Oil to Shell, rather than ENI is made of sterner stuff. That said, his nuclear ambitions did fall somewhat short of those of Kim Yong Un. Let's wish Neptune Energy a long, scandal free future and greater integrity than bungling BG with its House of Cards and flamboyant ineptitude.

Bogus Group: Following the acquisition of Engie the Financial Times headline “Neptune Energy sets aim on being the next BG Group” may have sent a chill through some. To think there could possibly be a rise from the ashes is an alarming prospect
However there was some comfort in the company chairman statement “We have the opportunity to take the time to get it right”.
Hopefully this means their Ethics and Compliance foundation will actually be more than just another policy open to distortion by misconduct.

Bill Campbell: Is the New York City case against Oil Companies justifiable or just hot air?

Many, if not all prestigious US scientific journals estimate largest source of air pollution in US is caused by vehicle emissions. Current estimates that US has some 260 million automobiles and 11 million trucks. It is the daily emissions from these vehicles that are the cause of scientific concern. But anybody visiting Florida, and following a construction truck, will be familiar with black smoke in copious amounts emitting from the vertical exhaust pipe, sometimes it's so bad it can restrict your vision but Florida is not the only state of the US that does not require emission control, there are many more, monitoring for example (like a UK vehicle MOT) is not legally required or carried out.

So perhaps De Blasio should start suing these delinquent states.

In any case, I find the whole matter ludicrous in a country, where their President claims that human activity is not related in any way to global warming and appoints a head of EPA who is also so inclined (a man described by NY Times as an arsonist in the Fire Station) so why does Shell et all not call as witnesses in their defence the current EPA Director, or otherwise why does De Blasio not start by suing those states that allow millions of vehicles to pollute the atmosphere daily.
Bill

Bonus Group: Further to my last post on this blog. Sound Energy have now arranged a slap-up bean feast for their shareholders to be held on 15th February at Grace Hall, Leadenhall Street, London. Drinks at Carriages afterwards. Dress is formal so don't expect too energetic a food fight. Attendees must pay for their own tickets! All will be revealed about the new Coro strategy. You may recall that Sound shareholders will receive Coro shares as a result of the divestment of Sound's Italian assets. The question is whether Sound shareholders will end up in the soup.

Bonus Group: There are rumblings in the ether about Rockhopper Exploration plc having failed to perform Due Diligence with integrity in respect of their purchase of the Italian focused company Mediterranean Oil and Gas (MOG) in 2014, and in particular MOG's asset, the Ombrina Mare oil field.
Following the decision in February 2016 by the Ministry of Economic Development not to award the company a production concession covering the Ombrina Mare field, the company has considered its legal options with regard to obtaining damages and compensation from the Republic of Italy for breaching the Energy Charter Treaty (ECT).
Could this have anything to do with the sudden and unexpected departure of Rockhopper's Chief Operating Officer, one 'Good Time' Fiona MacAuley? Fiona, a Chartered Geologist, started her career with Mobil North Sea Limited in 1985 and has subsequently held key roles in a number of leading oil and gas firms across large mid and small cap E&Ps including BG and Hess.
Fiona is now Chief Executive Officer of Echo Energy plc where Stephen Whyte (also ex BG) is a Non-Executive Director, previously having been Chairman of Sound Energy. Fiona will also become a Non-Executive Director of Saffron Energy plc. It is proposed that Saffron acquires Sound Energy's portfolio of Italian interests and permits through the acquisition by Saffron of Sound Energy Holdings Italy Limited (SEHIL). SEHIL holds all of Sound Energy's Italian oil and gas interests through its own wholly owned subsidiary, Apennine Energy SpA (APN). It is proposed that Saffron will be renamed Coro Energy plc.
This is yet another 'reverse takeover' by the Sound Energy/Echo Energy Team. The share options for the directors are raining on them like confetti. Could there be bonuses in store for the Directors of this association of companies where the paint is never allowed to dry?
Plenty of 'smoke and mirrors' and wool being pulled over the shareholders' eyes in this can of worms.

Bogus Group: No doubt Chevron and partner Serica Energy will have their legal and commercial teams in action. Production on the partner owned Erskine platform has been shut down due to a blockage in the Chrysaor operated Lomond - Everest pipeline export route. Chrysaor purchased the assets from Shell who in turn inherited from BG Group.
Déjà vu springs to mind, as the Chevron partnership’s revenue was affected two years ago, due to a blockage in the same pipeline when BG Group was the operator.
The well-touted “lessons learned” jargon, will no doubt be on the lips of these companies executives as they scurry to apportion blame.
In a previous post Bonus Group stated “BG shrapnel has fragmented in the direction of Tailwind Energy”
This appears to be a similar story as other BG shrapnel (both operations and legal) moved to Chrysaor via the Shell route.
I’m sure the Chrysaor mob will feel comfortable dealing with the legal and commercial issues experienced with BG Group (later Shell), as it will be the same rhetoric for the causal factors. However Chevron and Serica may want to dig a bit deeper into the previous incident, to see how BG Group dealt with this, the transparency of reporting and who was made accountable.

Ornithologist: If it walks like a duck, quacks like a duck, it may well turn out not to be a penguin!

Bonus Group: BG shrapnel has fragmented in the direction of Tailwind Energy (aka Tailspin Energy!). Much hot air from after-burn can be expected from this company - mercurial bunch. In December they announced the acquisition of Shell Expro's interests in Triton Cluster, located in the UK Central North Sea 190km east of Aberdeen. Their stated intention is to further develop the asset. Probably through a three pronged approach: bonus, bonus and more bonus! Will Triton turn-out to be a flounder?

Bill Campbell: End of ammunition supply!
Not sure what the ammunition comment means, are you being positive or negative. If Shell keep supplying the ammo well this website is under no obligation not to use it surely. We would all like the ammo to dry up. It would be pleasant to see the most corrupt organisation in Europe turn the corner, and for example demonstrate daily openness,honesty and integrity instead of serial lies. When I say it's a corrupt organisation I do not infer this characteristic on the worker bees, but it is clearly corrupt from the top to the top, that is in its boardroom, including the non-executives who tend to know what goes on but sit on their hands, anything for an easy life. Highly paid window dressing.

Ammunition: Mr Donovan, Shell seems to have provided you with a huge amount of ammunition over the years. Is there any end in sight?

Royal Dutch and The Law: Hello website, can I suggest that if the Dutch and Itailian Prosecution services are not aware of the Shell /police authority "happenings" in Eire, that they should be and quickly.

Shell Corrib Corruption: Mr D I make the reference of a link with police heroin dealing inquiry on this fact Athlone police station ( Heroin hub ) was the chosen destination for the balance of the Shell alcohol consignment on the instruction of Garda Sub Aqua SUPREMO Liam Grimes so that's drugs and alcohol meeting in the same police station "of all the police stations in all the world you had to walk into mine "...is there a " link. "Time will tell ...we recognise that 99 out of 100 Irish police personnel are amongst the finest in Europe....however ....

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